Delivery and logistics businesses have benefited greatly from the e-commerce boom in recent years, but with customers increasingly unwilling to pay a delivery fee, could electrification help fleets remain competitive?
Michael Mounteney, UK director of electric business at end-to-end EV infrastructure provider TSG UK Solutions, explores the benefits of going green and provides practical tips for those considering their EV fleet transition plan.
In 2020, e-commerce grew 4.5 times faster in the UK than the previous 5-year average, amounting to nearly a quarter of all retail sales and a 70% rise in deliveries overall. This rapid growth has brought great change to the fleet sector, providing a significant boost to delivery and logistics companies.
‘Last-mile’ deliveries come at a cost; however, one which consumers are increasingly less willing to pay. Online shoppers have come to expect fast and free delivery, but with this final phase of the process making up around 50% of the total expense of shipping, offering this service is a substantial overhead that must be shouldered by retailers and delivery firms.
Tackling inefficiencies in the last mile through innovation, technology and improved processes is a top priority for business owners looking to increase their profit margins.
Electric solution
While all ‘last-mile’ delivery companies have seen a boost since the pandemic, there’s a big difference between internal combustion engine (ICE) fleets, at around 3-4% year-on-year, and electric vehicle fleets, which have seen 25-30% growth.
Governmental policy to restrict the use of internal combustion engine vehicles in urban areas is growing across Europe, so converting your fleet to electric will future-proof your business. It is financially viable from a total cost of ownership (TCO) perspective too.
Petrol vs. electric – how do they measure up?
Servicing and maintenance costs: EVs are around 70% cheaper to maintain than ICE vehicles because they have far fewer moving parts. The main cost is battery replacement. Check manufacturers’ warranties – most are covered for eight years or up to 100,000 miles but should still be providing decent capacity at 200,000 miles and beyond.
Day-to-day running costs: EVs are far cheaper to run than ICE. According to Zap Map, based on an electricity price of 25p per kWh and a fuel price of 150p per litre, it would cost an EV around £600 per year to travel 10,000 miles, compared to £1,200 for a petrol vehicle.
Government grants and tax breaks: EV uptake is incentivised through the tax system. Battery electric vehicles (BEVs) are exempt from road tax schemes and eligible for government initiatives such as the Workplace Charging Scheme, which offers funding towards the cost of installing and purchasing EV charge points for fleets.
Inner-city fleets: Zero-emission vehicles are exempt from paying the London Congestion Charge, which could save around £2,500 per year.
Efficiency: Regenerative braking, which uses energy from the vehicle slowing down to recharge the battery, contributes to increased efficiency in EVs.
Corporate Social Responsibility: Switching to EVs for last-mile delivery will have a big impact on carbon footprint and improve local air quality. Early adopters will benefit from the marketing potential of leading in this area.
Last-mile logistics
Electrifying a fleet is not only about the vehicles; in-house charging infrastructure is key to maximising potential. Recent innovations have led to a wide range of technological advances, including hardware and software to manage every aspect of a project, from supply, installation and commissioning to comprehensive on-going maintenance.
An end-to-end EV solutions provider will work with you to design the ideal solution for your delivery business, enabling your new fleet of vans to return to base and charge during set times. Intelligent monitoring solutions, such as Dynamic Load Management, help businesses to control electrical load on their property, allowing for controlled expansion as the fleet grows.
Research indicates that shoppers will continue to spend their money online, despite the end of Covid-19 restrictions. Electrification of delivery fleets, including the installation of charging infrastructure and associated tracking software, is an investment in a profitable future, offering instant financial benefits that will continue to grow as the EV market develops.
